What changed in this filing

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Item 1A. Risk Factors

2024-03-29 compared with 2023-03-31 · 409 added, 424 removed, 400 unchanged (68% of the section changed)

Risk Factors.

You should carefully

consider the risks described below as well as other information provided to you in this document, including information in the section

of this document entitled “Cautionary Note Concerning Forward Looking Statements.” If any of the following risks actually

occur, the Company’s business, financial condition or results of operations could be materially adversely affected, the value of

the Company’s Common Stock could decline, and you may lose all or part of your investment.

You should carefully consider

the risks described below as well as other information provided to you in this document, including information in the section of this

document entitled “Cautionary Note Concerning Forward Looking Statements.” If any of the following risks actually occur,

the Company’s business, financial condition or results of operations could be materially adversely affected, the value of the Company’s

Common Stock could decline, and you may lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

Risks Related to our Business

Our business could be materially and adversely

affected by the lingering impact of the global COVID-19 pandemic or other epidemics and outbreaks.

The COVID-19 pandemic had disrupted and affected our business

operations, which has led to business and supply chain disruptions.

The lingering effects of the pandemic are likely to continue to disrupt

our business and supply chain in the future.

For example, our ability to gain new retail authorizations could be impacted by restrictions

in retail outlets and our ability to generate sales and brand awareness in bars and restaurants could be impacted if restrictions are

place on these establishments.

However, given the unpredictable nature of COVID-19 and its variants, it is difficult, if not

impossible, to predict, whether any government-imposed restrictions will be reimposed at previous levels or enhanced in one or more ways

impacting our business operations or those of third parties upon which we rely.

The COVID-19 pandemic, including associated

business interruptions and recovery, as well as other possible epidemics or outbreaks of other contagions could result in a material adverse

impact on our or our current or anticipated customers’ or suppliers’ business operations, including reduction or suspension

of operations in the U.S.

or other parts of the world.

Our design and engineering operations, among others, cannot all be conducted remotely

and often require on-site access to materials and equipment.

We have customers, suppliers, and partners with international operations,

and our customers, suppliers, and partners also depend on suppliers and manufacturers worldwide, which means that our business and prospects

could be affected by the lingering effects of the COVID-19 pandemic anywhere in the world.

Depending upon the duration of the

lingering effects of the COVID-19 pandemic and the associated business interruptions, our customers, suppliers, manufacturers,

and partners may suspend or delay their engagements with us.

We and our customers’ and suppliers’ response to the lingering

effects of the COVID-19 pandemic may prove to be inadequate and they may be unable to continue their respective operations in

the manner they had prior to the outbreak or the worsening of the outbreak, and we may consequently endure interruptions, reputational

harm, delays in our product development, and shipments, all of which could have an adverse effect on our business, operating results,

and financial condition.

In addition, we cannot assure you as to the timing of the economic recovery given the lingering effects of the

pandemic, which could have a material adverse effect on our target markets and our business.

If we are unable to continue as a going concern,

our securities will have little or no value.

Our auditors have included an explanatory paragraph

in their opinion regarding our ability to continue as a going concern.

If we are unable to continue as a going concern, our securities

will have little or no value.

Rose, Snyder & Jacobs LLP,

our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph

in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating

that our current liquidity position raises substantial doubt about our ability to continue as a going concern.

If we are unable to improve

our liquidity position, we may not be able to continue as a going concern.

We have sustained recurring losses

and we have had a working capital and stockholders’ equity deficits.

These prior losses and expected future losses have had, and

will continue to have, an adverse effect on our financial condition.

In addition, continued operations and our ability to continue as

a going concern may be dependent on our ability to obtain additional financing in the near future and thereafter, and there are no assurances

that such financing will be available to us at all or will be available in sufficient amounts or on reasonable terms.

Our financial statements

do not include any adjustments that may result from the outcome of this uncertainty.

If we are unable to generate additional funds in

the future through sales of our products, financings or from other sources or transactions, we will exhaust our resources and will be

unable to continue operations.

If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment

and we have had working capital and stockholders’ equity deficits.

These prior losses and expected future losses have had,

and will continue to have, an

adverse effect on our financial condition.

In addition, continued operations and our ability to continue as a going concern may be dependent

on our ability to obtain additional financing in the near future and thereafter, and there are no assurances that such financing will

be available to us at all or will be available in sufficient amounts or on reasonable terms.

Our financial statements do not include

any adjustments that may result from the outcome of this uncertainty.

If we are unable to generate additional funds in the future through

sales of our products, financing or from other sources or transactions, we will exhaust our resources and will be unable to continue

If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us.

Management recognizes that it

may be required to obtain additional resources via issuances of indebtedness or equity to successfully execute its business plans.

assurances can be given that management will be successful in raising additional capital, if needed, or on acceptable terms.

These conditions

raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months.

These financial statements

do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities

that might be necessary should the Company be unable to continue as a going concern.

We have experienced recurring losses from operations

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The size of our losses will depend, in part, on the

rate of future expenditures and our ability to generate revenues.

We incurred a net loss of $21.7

million for the year ended December 31, 2 022 .

Our accumulated deficit increased to $112.3

million as of December 31, 2 022 , compared to the prior year’s deficit of $90.6

rate of future expenditures, our ability to execute on our acquisition strategy and our ability to generate revenues.

We incurred a net

loss of $21.0 million for the year ended December 31, 2 023 .

Our accumulated deficit increased to $133.3 million as of December 31, 2 023 , compared

to the prior year’s deficit of $112.3 million.

We may encounter unforeseen expenses,

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A decline in the value of our company could cause you to lose all or part of your investment.

If we are not able to successfully execute on

our future operating plans and objectives, our financial condition and results of operation may be materially adversely affected, and

we may not be able to continue as a going concern.

It is important that we meet our

sales goals and increase sales going forward as our operating plan already reflects prior significant cost containment measures and may

make it difficult to achieve top-line growth if further significant reductions become necessary.

If we do not meet our sales goals, our

available cash and working capital will decrease and our financial condition will be negatively impacted.

If we are not able to successfully execute

on our future operating plans and objectives, our financial condition and results of operation may be materially adversely affected,

and we may not be able to continue as a going concern.

It is important that we meet

our sales goals and increase sales going forward as our operating plan already reflects prior significant cost containment measures and

may make it difficult to achieve top-line growth if further significant reductions become necessary.

If we do not meet our sales goals,

our available cash and working capital will decrease and our financial condition will be negatively impacted.

In order to be successful, we

believe that we must, among other things:

the sales volume and gross margins for our products;

efficiencies in operations;

our operating expenses to sufficiently support operating activities;

fixed costs at or near current levels;

significant increases in variable costs relating to production, marketing and distribution.

increase the sales volume and gross margins for

our products and those that we will acquire;

maintain efficiencies in operations;

manage our operating expenses to sufficiently

support operating activities;

maintain fixed costs at or near current levels;

avoid significant increases in variable costs

relating to production, marketing and distribution.

We may not be able to meet these

objectives, which could have a material adverse effect on our results of operations.

We have incurred significant operating expenses in

the past and may do so again in the future and, as a result, will need to increase revenues in order to improve our results of operations.

We have incurred significant operating expenses

in the past and may do so again in the future and, as a result, will need to increase revenues in order to improve our results of operations.

Our ability to increase sales will depend primarily on success in expanding our current markets, improving our distribution base, entering

into Direct-To-Retail (DTR) arrangements with national accounts, and introducing new brands, products or product extensions to the market.

Our ability to successfully enter new distribution areas and obtain national accounts will, in turn, depend on various factors, many of

which are beyond our control, including, but not limited to, the continued demand for our brands and products in target markets, the ability

to price our products at competitive levels, the ability to establish and maintain relationships with distributors in each geographic

area of distribution and the ability in the future to create, develop and successfully introduce one or more new brands, products, and

product extensions.

into Direct-To-Retail (DTR) arrangements with national accounts,

and introducing new brands, products

or product extensions to the market.

Our ability to successfully enter new distribution areas and obtain national accounts will, in turn,

depend on various factors, many of which are beyond our control, including, but not limited to, the continued demand for our brands and

products in target markets, the ability to price our products at competitive levels, available positions within the retailer’s

planograms, the ability to establish and maintain relationships with distributors in each geographic area of distribution and the ability

in the future to create, develop and successfully introduce one or more new brands, products, and product extensions.

Demand for our products

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as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer preferences.

not adequately anticipate and react to changing demographics, consumer and economic trends, health concerns and product preferences, our

financial results could be adversely affected.

not adequately anticipate and react to changing demographics, consumer and economic trends, health concerns and product preferences,

our financial results could be adversely affected.

Additionally, failure to introduce

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may not succeed.

Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations and obesity

concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing

Sales of our products may be adversely affected by the negative publicity associated with these issues...

Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations and

obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and

pricing pressures.

Sales of our products may be adversely affected by negative publicity associated with these issues.

If we do not adequately

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The principal raw materials we

use include glass bottles, aluminum cans, labels and cardboard cartons, flavorings and sweeteners.

These ingredient costs are subject

to fluctuation.

Substantial increases in the prices of our ingredients, raw materials and packaging materials, to the extent that they

cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce

our profitability.

If our supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability

of our products and reduce sales.

use include glass bottles, aluminum cans, PET, fiber-board, labels and cardboard cartons, flavorings and sweeteners.

These component

and ingredient costs are subject to fluctuation.

If there were to be substantial increases in the prices of our ingredients, raw materials

and packaging materials, to the extent that they cannot be recouped through increases in the prices of finished beverage products, would

increase our operating costs and could reduce our profitability.

If our supply of these raw materials is impaired or if prices increase

significantly, it could affect the affordability of our products and reduce sales.

If we are unable to secure sufficient

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Our business is dependent upon

awareness and market acceptance of our products and brands by our target market, trendy, young consumers looking for a distinctive tonality

in their beverage choices.

In addition, our business depends on acceptance by our independent distributors and retailers of our brands

as beverage brands that have the potential to provide incremental sales growth.

If we are not successful in the revitalization and growth

of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and

retail consumers.

Any failure of our brand to maintain or increase acceptance or market penetration would likely have a material adverse

effect on our revenues and financial results.

awareness and market acceptance of our products and brands by our target markets.

In addition, our business depends on acceptance by

our independent distributors and retailers of our brands as beverage brands that have the potential to provide incremental sales growth.

If we are not successful in the revitalization and growth of our brand and product offerings, we may not achieve and maintain satisfactory

levels of acceptance by independent distributors and retail consumers.

Any failure of our brand to maintain or increase acceptance or

market penetration would likely have a material adverse effect on our revenues and financial results.

Our brands and brand images are keys to our

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to maintain brand image for our existing products and effectively build up brand image for new products and brand extensions.

predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on

consumer preferences.

In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our reputation

and image of the affected brands and could cause consumers to choose other products.

Our brand image can also be adversely affected by

unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our products or those

of our competitors.

predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and

on consumer preferences.

In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our

reputation and image of the affected brands and could cause consumers to choose other products.

Our brand image can also be adversely

affected by unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our

products or those of our competitors.

Competition from traditional and large, well-financed

non-alcoholic and alcoholic beverage manufacturers may adversely affect our distribution relationships and may hinder development of our

existing markets, as well as prevent us from expanding our markets.

non-alcoholic and alcoholic beverage manufacturers may adversely affect our distribution relationships and may hinder development of

our existing markets, as well as prevent us from expanding our markets.

The beverage industry is highly

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We also compete with

regional beverage producers and “private label” hydration suppliers.

regional beverage producers and “private label” brands.

Increased competitor consolidations,

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as well as on our ability to expand the market for our products.

We may experience a reduced demand for some of our products due to

health concerns (including obesity) and legislative initiatives against sweetened beverages.

Consumers are concerned about

health and wellness;

public health officials and government officials are increasingly vocal about obesity and its consequences.

has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened beverages, as well as

increased public scrutiny, new taxes on sugar-sweetened beverages (as described below), and additional governmental regulations concerning

the marketing and labeling/packing of the beverage industry.

Additional or revised regulatory requirements, whether labeling, tax or otherwise,

could have a material adverse effect on our financial condition and results of operations.

Further, increasing public concern with respect

to sweetened beverages could reduce demand for our beverages and increase desire for more low-calorie soft drinks, water, enhanced water,

coffee-flavored beverages, tea, and beverages with natural sweeteners.

We are continuously working to reduce calories and sugar in our

TapouT products while launching new products, to pair with existing brand extensions that round out our diversified portfolio.

Legislative or regulatory changes that affect

our products, including new taxes, could reduce demand for products or increase our costs.

Taxes imposed on the sale of certain

of our products by federal, state and local governments in the United States, or other countries in which we operate could cause consumers

to shift away from purchasing our beverages.

Several municipalities in the United States have implemented or are considering implementing

taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks, teas and flavored waters to

help fund various initiatives.

Taxes imposed on the sale of

certain of our products by federal, state and local governments in the United States, or other countries in which we operate could cause

consumers to shift away from purchasing our beverages.

Several municipalities in the United States have implemented or are considering

implementing taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks, teas and flavored

waters to help fund various initiatives.

These taxes could materially affect our business and financial results.

Our reliance on distributors, retailers and

brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand

our business into other geographic markets.

brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and

expand our business into other geographic markets.

Our ability to maintain and expand

our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish

and maintain successful relationships with reliable distributors, retailers and brokers strategically positioned to serve those areas.

Most of our distributors, retailers and brokers sell and distribute competing products, including non-alcoholic and alcoholic beverages,

and our products may represent a small portion of their businesses.

The success of this network will depend on the performance of the

distributors, retailers and brokers of this network.

There is a risk that the mentioned entities may not adequately perform their functions

within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that

may not be receptive to our product.

our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to

establish and maintain successful relationships with reliable distributors, retailers and brokers strategically positioned to serve those

Most of our distributors, retailers and brokers sell and distribute competing products, including non-alcoholic and alcoholic

beverages, and our products may represent a small portion of their businesses.

The success of this network will depend on the performance

of the distributors, retailers and brokers of this network.

There is a risk that the mentioned entities may not adequately perform their

functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities

that may not be receptive to our product.

Our ability to incentivize and motivate distributors to manage and sell our products is affected

by competition from other beverage companies who have greater resources than we do.

To the extent that our distributors, retailers and

brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking

the retail shelves with our products, our sales and results of operations could be adversely affected.

Furthermore, such third-parties’

financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.

by competition from other beverage companies, some of which may have greater resources than we do.

To the extent that our distributors,

retailers and brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products,

including re-stocking the retail shelves with our products, our sales and results of operations could be adversely affected.

such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing

and sales activities.

Our ability to maintain and expand

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Some of these factors include:

the level of demand for

our brands and products in a particular distribution area;

our ability to price our

products at levels competitive with those of competing products;

our ability to deliver

products in the quantity and at the time ordered by distributors, retailers and brokers.

the level of demand for our brands and products in a particular distribution

our ability to price our products at levels competitive with those

of competing products;

our ability to deliver products in the quantity and at the time ordered

by distributors, retailers and brokers.

We may not be able to successfully

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of our sales because our distributors are not required to place minimum orders with us.

Our independent distributors and

national accounts are not required to place minimum monthly or annual orders for our products.

In order to reduce their inventory costs,

independent distributors typically order products from us on a “just in time” basis in quantities and at such times based

on the demand for the products in a particular distribution area.

Accordingly, we cannot predict the timing or quantity of purchases by

any of our independent distributors or whether any of our distributors will continue to purchase products from us in the same frequencies

Our independent distributors

and national accounts are not required to place minimum monthly or annual orders for our products.

In order to reduce their inventory

costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times

based on the demand for the products in a particular distribution area.

Accordingly, we cannot predict the timing or quantity of purchases

by any of our independent distributors or whether any of our distributors will continue to purchase products from us in the same frequencies

and volumes as they may have done in the past.

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levels, our operating results could be adversely affected.

We need to maintain adequate inventory

levels to be able to deliver products to distributors on a timely basis.

Our inventory supply depends on our ability to correctly estimate

demand for our products.

Our ability to estimate demand for our products is imprecise, particularly for new products, seasonal promotions

and new markets.

If we materially underestimate demand for our products or are unable to maintain sufficient inventory of raw materials,

we might not be able to satisfy demand on a short-term basis.

If we overestimate distributor or retailer demand for our products, we may

end up with too much inventory, resulting in higher storage costs, increased trade spend and the risk of inventory spoilage.

to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers and could delay or lose

sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results.

In addition, if the inventory

of our products held by our distributors and retailers is too high, they will not place orders for additional products, which would also

unfavorably impact our sales and adversely affect our operating results.

We need to maintain adequate

inventory levels to be able to deliver products to distributors on a timely basis.

Our inventory supply depends on our ability to correctly

estimate demand for our products.

Our ability to estimate demand for our products is imprecise, particularly for new products, seasonal

promotions and new markets.

If we materially underestimate demand for our products or are unable to maintain sufficient inventory of

raw materials, we might not be able to satisfy demand on a short-term basis.

If we overestimate distributor or retailer demand for our

products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend and the risk of inventory spoilage.

If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers and could delay

or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results.

if the inventory of our products held by our distributors and retailers is too high, they will not place orders for additional products,

which would also unfavorably impact our sales and adversely affect our operating results.

If we fail to maintain relationships with our

independent contract manufacturers, our business could be harmed.

We do not manufacture our products

but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers).

own the plants or the majority of the equipment required to manufacture and package our beverage products, and we do not anticipate bringing

the manufacturing process in-house in the future.

Our ability to maintain effective relationships with contract manufacturers and other

third parties for the production and delivery of our beverage products in a particular geographic distribution area is important to the

success of our operations within each distribution area.

We may not be able to maintain our relationships with current contract manufacturers

or establish satisfactory relationships with new or replacement contract manufacturers, whether in existing or new geographic distribution

The failure to establish and maintain effective relationships with contract manufacturers for a distribution area could increase

our manufacturing costs and thereby materially reduce gross profits from the sale of our products in that area.

Poor relations with any

of our contract manufacturers could adversely affect the amount and timing of product delivered to our distributors for resale, which

would in turn adversely affect our revenues and financial condition.

In addition, our agreements with our contract manufacturers are terminable

at any time, and any such termination could disrupt our ability to deliver products to our customers.

We do not manufacture SALT Tequila,

Pulpoloco Sangria or TapouT performance drinks but instead outsource the manufacturing process to third-party bottlers and independent

contract manufacturers (co-packers).

We do not own the plants or the majority of the equipment required to manufacture and package these

Our ability to maintain effective relationships with contract manufacturers and other third parties for the production and delivery

of our beverage products in a particular geographic distribution area is important to the success of our operations within each distribution

We may not be able to maintain our relationships with current contract manufacturers or establish satisfactory relationships with

new or replacement contract manufacturers, whether in existing or new geographic distribution areas.

The failure to establish and maintain

effective relationships with contract manufacturers for a distribution area could increase our manufacturing costs and thereby materially

reduce gross profits from the sale of our products in that area.

Poor relations with any of our contract manufacturers could adversely

affect the amount and timing of product delivered to our distributors for resale, which would in turn adversely affect our revenues and

financial condition.

In addition, our agreements with our contract manufacturers are terminable at any time, and any such termination

could disrupt our ability to deliver products to our customers.

The volatility of energy and increased regulations

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It is hard to predict what will happen in the fuel markets in 2024 and

Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers.

Due to the price sensitivity of our products, we may not always be able to pass such increases on to our customers.

Disruption within our supply chain, contract

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Although we have the exclusive rights to

flavor concentrates developed with our current flavor concentrate suppliers, and while we have the rights to the ingredients for our products,

we do not have the list of ingredients for our flavor extracts and concentrates.

Consequently, we may be unable to obtain these exact

flavors or concentrates from alternative suppliers on short notice.

If we have to replace a flavor supplier, we could experience disruptions

in our ability to deliver products to our customers, which could have a material adverse effect on our results of operations.

If we are unable to attract and retain key personnel,

our efficiency and operations would be adversely affected;

in addition, management turnover causes uncertainties and could harm our business.

flavor concentrates developed with our current flavor concentrate suppliers, and while we have the rights to the ingredients for our

products, we do not have the list of ingredients for our flavor extracts and concentrates.

Consequently, we may be unable to obtain these

exact flavors or concentrates from alternative suppliers on short notice.

If we have to replace a flavor supplier, we could experience

disruptions in our ability to deliver products to our customers, which could have a material adverse effect on our results of operations.

If we are unable to attract and retain key

personnel, our efficiency and operations would be adversely affected;

in addition, management turnover causes uncertainties and could

harm our business.

Our success depends on our ability

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We may not be able to provide our employees

with competitive salaries, and our operating results could be adversely affected by increased costs due to increased competition for employees,

higher employee turnover or increased employee benefit costs.

with competitive salaries, and our operating results could be adversely affected by increased costs due to increased competition for

employees, higher employee turnover or increased employee benefit costs.

Changes to operations, policies

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protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively.

enforcing or defending our intellectual property rights, including our trademarks, copyrights, licenses and trade secrets, could result

in the expenditure of significant financial and managerial resources.

We regard our intellectual property, particularly our trademarks

and trade secrets to be of considerable value and importance to our business and our success, and we actively pursue the registration

of our trademarks in the United States and internationally.

However, the steps taken by us to protect these proprietary rights may not

be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar proprietary

In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other

parties to assert our rights.

enforcing or defending our intellectual property rights, including our trademarks,

copyrights, licenses and trade

secrets, could result in the expenditure of significant financial and managerial resources.

We regard our intellectual property, particularly

our trademarks and trade secrets to be of considerable value and importance to our business and our success, and we actively pursue the

registration of our trademarks in the United States and internationally.

However, the steps taken by us to protect these proprietary

rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar

proprietary rights.

In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation

against other parties to assert our rights.

Any such claim or litigation could be costly.

In addition, any event that would jeopardize our proprietary

rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands,

profitably exploit our products or recoup our associated research and development costs.

In addition, any event that would jeopardize

our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or

sell our brands, profitably exploit our products or recoup our associated research and development costs.

As part of the licensing strategy

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Although our agreements require that the use of our trademarks and designs is subject to our control and approval, any

breach of these provisions, or any other action by any of our licensing partners that is harmful to our brands, goodwill and overall image,

could have a material adverse impact on our business.

We may be required in the future to record a

significant charge to earnings if our goodwill or intangible assets become impaired.

breach of these provisions, or any other action by any of our licensing partners that is harmful to our brands, goodwill and overall

image, could have a material adverse impact on our business.

We may be required in the future to record

a significant charge to earnings if our goodwill or intangible assets become impaired.

Under United States Generally

Accepted Accounting Principles (“U.S.

GAAP”), we are required to review our intangible assets for impairment when events or

changes in circumstances indicate the carrying value may not be recoverable.

Factors that may be considered a change in circumstances

indicating that the carrying value of our intangible assets may not be recoverable include, declining or slower than anticipated growth

rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry.

GAAP”), we are required to review our intangible assets for impairment at least annually

or when events or changes in circumstances indicate the carrying value may not be recoverable.

Factors that may be considered a change

in circumstances indicating that the carrying value of our intangible assets may not be recoverable include, declining or slower than

anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth

rates in our industry.

We may be required in the future

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such charge would adversely impact our results of operations.

As of December 31, 2022, our intangible assets totaled approximately $5.81million.

As of December 31, 2023, our intangible assets totaled approximately $4.71

If we encounter product recalls or other product

quality issues, our business may suffer.

Product quality issues, real or

imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and could cause consumers to

choose other products.

In addition, because of changing government regulations or implementation thereof, or allegations of product contamination,

we may be required from time to time to recall products entirely or from specific markets.

Product recalls could affect our profitability

and could negatively affect brand image.

Product quality issues, real

or imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and could cause consumers

to choose other products.

In addition, because of changing government regulations or implementation thereof, or allegations of product

contamination, we may be required from time to time to recall products entirely or from specific markets.

Product recalls could affect

our profitability and could negatively affect brand image.

Our business is subject to many regulations and noncompliance is

The production, marketing and

sale of our beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal, provincial,

state and local health agencies.

If a regulatory authority finds that a current or future product or production batch or “run”

is not in compliance with any of these regulations, we may be fined, or production may be stopped, which would adversely affect our financial

condition and results of operations.

Similarly, any adverse publicity associated with any noncompliance may damage our reputation and

our ability to successfully market our products.

Furthermore, the rules and regulations are subject to change from time to time and while

we closely monitor developments in this area, we cannot anticipate whether changes in these rules and regulations will impact our business

Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse

effect on our financial condition and results of operations.

Significant additional labeling or warning requirements

may inhibit sales of affected products.

sale of our beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal,

provincial, state and local health agencies.

If a regulatory authority finds that a current or future product or production batch or

“run” is not in compliance with any of these regulations, we may be fined, or production may be stopped, which would adversely

affect our financial condition and results of operations.

Similarly, any adverse publicity associated with any noncompliance may damage

our reputation and our ability to successfully market our products.

Furthermore, the rules and regulations are subject to change from

time to time and while we closely monitor developments in this area, we cannot anticipate whether changes in these rules and regulations

will impact our business adversely.

Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise,

could have a material adverse effect on our financial condition and results of operations.

Significant additional labeling or warning

requirements may inhibit sales of affected products.

Various jurisdictions may seek

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consequences of certain of our products.

These types of requirements, if they become applicable to one or more of our products under current

or future environmental or health laws or regulations, may inhibit sales of such products.

In California, a law requires that a specific

warning appear on any product that contains a component listed by the state as having been found to cause cancer or birth defects.

law recognizes no generally applicable quantitative thresholds below which a warning is not required.

If a component found in one of our

products is added to the list, or if the increasing sensitivity of detection methodology that may become available under this law and

related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity of a listed

substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity could affect

These types of requirements, if they become applicable to one or more of our products under

current or future environmental or health laws or regulations, may inhibit sales of such products.

In California, a law requires that

a specific warning appear on any product that contains a component listed by the state as having been found to cause cancer or birth

This law recognizes no generally applicable quantitative thresholds below which a warning is not required.

If a component found

in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available under

this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity

of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity

could affect our sales.

Litigation or legal could expose us to significant

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proceedings that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.

Additionally, there has been public

attention directed at the beverage alcohol industry, which we believe is due to concern over problems related to harmful use of alcohol,

including drinking and driving, underage drinking and health consequences from the misuse of alcohol.

We could be exposed to lawsuits

relating to product liability or marketing or sales practices with respect to our alcoholic products.

Adverse developments in lawsuits

concerning these types of matters or a significant decline in the social acceptability of beverage alcohol products that may result from

lawsuits could have a material adverse effect on our business, liquidity, financial condition and results of operations.

Additionally, there has been

public attention directed at the beverage alcohol industry, which we believe is due to concern over problems related to harmful use of

alcohol, including drinking and driving, underage drinking and health consequences from the misuse of alcohol.

We could be exposed to

lawsuits relating to product liability or marketing or sales practices with respect to our alcoholic products.

Adverse developments in

lawsuits concerning these types of matters or a significant decline in the social acceptability of beverage alcohol products that may

result from lawsuits could have a material adverse effect on our business, liquidity, financial condition and results of operations.

We are subject to risks inherent in sales of

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Our operations outside of the

United States, contribute to our revenue and profitability, and we believe that developing and emerging markets could present future growth

opportunities for us.

However, there can be no assurance that existing or new products that we manufacture, distribute or sell will be

accepted or be successful in any particular foreign market, due to local or global competition, product price, cultural differences, and

consumer preferences or otherwise.

There are many factors that could adversely affect demand for our products in foreign markets, including

our inability to attract and maintain key distributors in these markets;

volatility in the economic growth of certain of these markets;

changes in economic, political or social conditions, the status and renegotiations of the North American Free Trade Agreement, imposition

of new or increased labeling, product or production requirements, or other legal restrictions;

restrictions on the import or export of

our products or ingredients or substances used in our products;

United States, contribute to our revenue and profitability, and we believe that developing and emerging markets could present future

growth opportunities for us.

However, there can be no assurance that existing or new products that we manufacture, distribute or sell

will be accepted or be successful in any particular foreign market, due to local or global competition, product price, cultural differences,

and consumer preferences or otherwise.

There are many factors that could adversely affect demand for our products in foreign markets,

including our inability to attract and maintain key distributors in these markets;

volatility in the economic growth of certain of these

changes in economic, political or social conditions, the status and renegotiations of the North American Free Trade Agreement,

imposition of new or increased labeling, product or production requirements, or other legal restrictions;

restrictions on the import

or export of our products or ingredients or substances used in our products;

inflationary currency, devaluation or fluctuation;

increased costs of

doing business due to compliance with complex foreign and U.S.

costs of doing business due to compliance with complex foreign and U.S.

laws and regulations.

If we are unable to effectively operate

or manage the risks associated with operating in international markets, our business, financial condition or results of operations could

be adversely affected.

If we are unable to effectively

operate or manage the risks associated with operating in international markets, our business, financial condition or results of operations

could be adversely affected.

Water scarcity and poor quality could negatively impact our

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It also is critical to the prosperity of the communities we serve.

Water is a limited resource in many parts

of the world, facing unprecedented challenges from overexploitation, increasing demand for food and other consumer and industrial products

whose manufacturing processes require water, increasing pollution and emerging awareness of potential contaminants, poor management, lack

of physical or financial access to water, sociopolitical tensions due to lack of public infrastructure in certain areas of the world and

the effects of climate change.

As the demand for water continues to increase around the world, and as water becomes scarcer and the quality

of available water deteriorates, we may incur higher costs or face capacity constraints and the possibility of reputational damage, which

could adversely affect our profitability or net operating revenues in the long run.

Water is a limited resource in many

parts of the world, facing unprecedented challenges from overexploitation, increasing demand for food and other consumer and industrial

products whose manufacturing processes require water, increasing pollution and emerging awareness of potential contaminants, poor management,

lack of physical or financial access to water, sociopolitical tensions due to lack of public infrastructure in certain areas of the world

and the effects of climate change.

As the demand for water continues to increase around the world, and as water becomes scarcer and the

quality of available water deteriorates, we may incur higher costs or face capacity constraints and the possibility of reputational damage,

which could adversely affect our profitability or net operating revenues in the long run.

Fluctuations in quantity and quality of grape

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programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems.

believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations from

these IT-related and other potential disruptions.

However, given the unpredictability of the timing, nature and scope of any such

IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational

delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential

or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks,

financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have

a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations

from these IT-related and other potential disruptions.

However, given the unpredictability of the timing, nature and scope of any

such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies,

operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of

confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our

systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation,

any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

If we fail to comply with personal data protection and privacy laws,

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These requirements with respect to personal data have subjected and

may continue in the future to subject the Company to, among other things, additional costs and expenses and have required and may in the

future require costly changes to our business practices and information security systems, policies, procedures and practices.

controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures and

practices we implemented or may implement in the future may not prevent the improper disclosure of personal data by us or the third-party

service providers and vendors whose technology, systems and services we use in connection with the receipt, storage and transmission of

personal data.

Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could

harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in

private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal

prosecution, all of which could negatively affect our business and operating results.

may continue in the future to subject the Company to, among other things, additional costs and expenses and have required and may in

the future require costly changes to our business practices and information security systems, policies, procedures and practices.

security controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures

and practices we implemented or may implement in the future may not prevent the improper disclosure of personal data by us or the third-party

service providers and vendors whose technology, systems and services we use in connection with the receipt, storage and transmission

of personal data.

Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws

could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result

in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or

criminal prosecution, all of which could negatively affect our business and operating results.

If our third-party service providers and business

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These third-party service providers and business partners are subject to similar risks as we are relating

to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory and

market risks of their own.

Our third-party service providers and business partners may not fulfill their respective commitments and responsibilities

in a timely manner and in accordance with the agreed-upon terms.

In addition, while we have procedures in place for selecting and managing

our relationships with third-party service providers and other business partners, we do not have control over their business operations

or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk.

If we are unable to effectively manage our third-party relationships, or for any reason our third-party service providers or business

partners fail to satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.

to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory

and market risks of their own.

Our third-party service providers and business partners may not fulfill their respective commitments and

responsibilities in a timely manner and in accordance with the agreed-upon terms.

In addition, while we have procedures in place for

selecting and managing our relationships with third-party service providers and other business partners, we do not have control over

their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational

and operational risk.

If we are unable to effectively manage our third-party relationships, or for any reason our third-party service

providers or business partners fail to satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.

Our results of operations may fluctuate from

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that the controls will prevent or detect misstatements.

Because of these and other inherent limitations of control systems, there is only

the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

The failure of

controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial

Because of these and other inherent limitations of control systems, there is

only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial

results, which could also negatively impact our stock price and investor confidence.

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in Mexico distiller or an adverse change in the terms of its services could have a negative impact on our business.

If our distiller in

Mexico increases its prices, we may not have alternative sources of supply at comparable prices and may not be able to raise the prices

If our distiller

in Mexico increases its prices, we may not have alternative sources of supply at comparable prices and may not be able to raise the prices

of our products to cover all, or even a portion, of the increased costs.

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could cause us to fail to meet orders, lose sales, incur additional costs, and/or expose us to product quality issues.

In turn, this could

cause us to lose credibility in the marketplace and damage our relationships with our customers and consumers, ultimately leading to a

decline in our business and results of operations.

In turn, this

could cause us to lose credibility in the marketplace and damage our relationships with our customers and consumers, ultimately leading

to a decline in our business and results of operations.

Regulatory decisions and changes in the legal,

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these laws and regulations are subject to interpretation, we may not be able to predict when, and to what extent, liability may arise.

Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking,

alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions

Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage

drinking, alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions

or limits on advertising or other marketing activities promoting beverage alcohol products.

Failure to comply with any of the current

or future regulations and requirements relating to our industry and products, could result in monetary penalties, suspension or even revocation

of our licenses and permits.

Costs of compliance with changes in regulations could be significant and could harm our business, as we may

find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our

sales and profit potential.

or future regulations and requirements relating to our industry and products, could result in monetary penalties, suspension or even

revocation of our licenses and permits.

Costs of compliance with changes in regulations could be significant and could harm our business,

as we may find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and

reduce our sales and profit potential.

In addition, the distribution

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We face substantial competition in the alcoholic

beverage industry, and we may not be able to effectively compete.

and non-alcoholic beverage industry, and we may not be able to effectively compete.

Consolidation among spirits producers,

distributors, wholesalers, or retailers could create a more challenging competitive landscape for our products.

Consolidation at any level

could hinder the distribution and sale of our products as a result of reduced attention and resources allocated to our brands, both during

and after transition periods, because our brands might represent a smaller portion of the new business portfolio.

Expansion into new product

categories by other suppliers, or innovation by new entrants into the market, could increase competition in our product categories.

to our route-to-consumer models or partners in important markets could result in temporary or longer-term sales disruption, higher implementation-related

or fixed costs, and could negatively affect other business relationships we might have with that partner.

Distribution network disruption

or fluctuations in our product inventory levels with distributors, wholesalers, or retailers could negatively affect our results for a

particular period.

Consolidation at any

level could hinder the distribution and sale of our products as a result of reduced attention and resources allocated to our brands,

both during and after transition periods, because our brands might represent a smaller portion of the new business portfolio.

into new product categories by other suppliers, or innovation by new entrants into the market, could increase competition in our product

Changes to our route-to-consumer models or partners in important markets could result in temporary or longer-term sales disruption,

higher implementation-related or fixed costs, and could negatively affect other business relationships we might have with that partner.

Distribution network disruption or fluctuations in our product inventory levels with distributors, wholesalers, or retailers could negatively

affect our results for a particular period.

Our competitors may respond to

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Our business operations may be adversely affected

by social, political and economic conditions affecting market risks and the demand for and pricing of our tequila products.

Unfavorable economic conditions

and related low consumer confidence, high unemployment, weak credit or capital markets, sovereign debt defaults, sequestrations,

austerity measures, higher interest rates, political instability, higher inflation, deflation, lower returns on pension assets, or

lower discount rates for pension obligations;

Changes in laws, regulations,

or policies – especially those that affect the production, importation, marketing, sale, or consumption of our beverage alcohol

Tax rate changes (including

excise, sales, tariffs, duties, corporate, individual income, dividends, capital gains), or changes in related reserves, changes

in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur;

by social, political and economic conditions affecting market risks and the demand for and pricing of our products.

These risks include:

Unfavorable economic conditions and related low consumer confidence,

high unemployment, weak credit or capital markets, sovereign debt defaults, sequestrations, austerity measures, higher interest rates,

political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations;

Changes in laws, regulations, or policies – especially those

that affect the production, importation, marketing, sale, or consumption of our beverage alcohol products;

Tax rate changes (including excise, sales, tariffs, duties, corporate,

individual income, dividends, capital gains), or changes in related reserves, changes in tax rules or accounting standards, and the

unpredictability and suddenness with which they can occur;

Dependence upon the continued growth of brand names;

Changes in consumer preferences,

consumption, or purchase patterns – particularly away from tequila, and our ability to anticipate and react to them;

bar, restaurant,

travel, or other on premise declines;

Unfavorable consumer reaction

to our products, package changes, product reformulations, or other product innovation;

Decline in the social acceptability

of beverage alcohol products in our markets;

Production facility or

supply chain disruption;

Imprecision in supply/demand

Higher costs, lower quality,

or unavailability of energy, input materials, labor, or finished goods;

Changes in consumer preferences, consumption, or purchase patterns

– particularly away from tequila, and our ability to anticipate and react to them;

bar, restaurant, travel, or other on-premise

Unfavorable consumer reaction to our products, package changes, product

reformulations, or other product innovation;

Decline in the social acceptability of beverage alcohol products in

Production facility or supply chain disruption;

Imprecision in supply/demand forecasting;

Higher costs, lower quality, or unavailability of energy, input materials,

labor, or finished goods;

Route-to-consumer changes that affect the timing of our sales, temporarily

disrupt the marketing or sale of our products, or result in higher implementation related or fixed costs;

Inventory fluctuations

in our products by distributors, wholesalers, or retailers;

Competitors’ consolidation or other competitive activities, such

as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion,

product introductions, or entry or expansion in our geographic markets;

Insufficient protection

of our intellectual property rights;

Product recalls or other

product liability claims;

product counterfeiting, tampering, or product quality issues;

Significant legal disputes

and proceedings;

government investigations (particularly of industry or company business, trade or marketing practices);

Failure or breach of key

information technology systems;

Negative publicity related

to our company, brands, marketing, personnel, operations, business performance or prospects;

Business disruption, decline,

or costs related to organizational changes, reductions in workforce, or other cost-cutting measures, or our failure to attract or

retain key executive or employee talent.

Inventory fluctuations in our products by distributors, wholesalers,

or retailers;

Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions,

promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in

our geographic markets;

Insufficient protection of our intellectual property rights;

Product recalls or other product liability claims;

product counterfeiting,

tampering, or product quality issues;

Significant legal disputes and proceedings;

government investigations

(particularly of industry or company business, trade or marketing practices);

Failure or breach of key information technology systems;

Negative publicity related to our company, brands, marketing, personnel,

operations, business performance or prospects;

Business disruption, decline, or costs related to organizational changes,

reductions in workforce, or other cost-cutting measures, or our failure to attract or retain key executive or employee talent.

Uncertainty in the financial markets and other

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and there can be no assurance of any return on any such investment.

An investment in tour common stock

An investment in our common stock

is speculative and there is no assurance that investors will obtain any return on their investment.

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our stockholders may be eligible to sell all or some of their common shares by means of ordinary brokerage transactions in the open market

pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to certain limitations.

In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information

Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), and current

public information and notice requirements.

pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to certain

In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current

public information requirement.

Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities),

and current public information and notice requirements.

Our Board of Directors may issue and fix the terms of shares

of our Preferred Stock without stockholder approval, which could adversely affect the voting power of holders of our Common Stock or any

change in control of our Company.

of our Preferred Stock without stockholder approval, which could adversely affect the voting power of holders of our Common Stock or

any change in control of our Company.

Our Articles of Incorporation

authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock, with par value $0.001 per share, with such

designation rights and preferences as may be determined from time to time by the Board of Directors.

authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock, with par value $0.001 per share, with

such designation rights and preferences as may be determined from time to time by the Board of Directors.

Our Board of Directors is empowered,

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Any such issuance would be subject to terms and conditions of any current offering that may disallow any such issuance.

Because certain principal stockholders own a

large percentage of our voting stock, other stockholders’ voting power may be limited.

As of December 31, 2022, our ten

(10) largest shareholders own or controlled approximately 35.5% of our outstanding common stock.

If those stockholders act together, they

would have the ability to have a substantial influence on matters submitted to our stockholders for approval, including the election and

removal of directors and the approval of any merger, consolidation or sale of all or substantially all of our assets.

As a result, our

other stockholders may have little or no influence over matters submitted for shareholder approval.

In addition, the ownership of such

stockholders could preclude any unsolicited acquisition of us, and consequently, adversely affect the price of our common stock.

stockholders may make decisions that are adverse to your interests.

Because certain principal stockholders own

a large percentage of our voting stock, other stockholders’ voting power may be limited.

As of December 31, 2023, our

ten (10) largest shareholders own or controlled approximately 21.2% of our outstanding common stock.

If those stockholders act together,

they would have the ability to have a substantial influence on matters submitted to our stockholders for approval, including the election

and removal of directors and the approval of any merger, consolidation or sale of all or substantially all of our assets.

our other stockholders may have little or no influence over matters submitted for shareholder approval.

In addition, the ownership of

such stockholders could preclude any unsolicited acquisition of us, and consequently, adversely affect the price of our common stock.

These stockholders may make decisions that are adverse to your interests.

We do not expect to pay dividends and investors

should not buy our Common Stock expecting to receive dividends.

We do not anticipate that we will

declare or pay any dividends in the foreseeable future.

Consequently, you will only realize an economic gain on your investment in our

common stock if the price appreciates.

We do not anticipate that we

will declare or pay any dividends in the foreseeable future.

Consequently, you will only realize an economic gain on your investment

in our common stock if the price appreciates.

You should not purchase our common stock expecting to receive cash dividends.

Therefore, our failure

to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations.

our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations.

There can be no assurances that our common

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and adversely affected if our common stock is not traded on a national securities exchange.

On October 6, 2023, the NYSE

American notified the Company that we were not in compliance with Section 1003(a)(i) of the continued listing standards set forth in

the NYSE American Company Guide (the “Company Guide”), requiring a listed company to have stockholders’ equity of (i)

at least $2.0 million if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years.

The notice had no immediate impact on the listing of our common stock, subject to our compliance with the other continued listing requirements.

In accordance with applicable NYSE American procedures, we submitted a plan of compliance (the “Plan”) advising of the definitive

action(s) the Company has taken, is taking, or would take, that would bring us into compliance with the continued listing standards within

the 18 months of receipt of the notice.

The NYSE American reviewed and accepted the Plan as a reasonable demonstration of an ability

to conform to the relevant standards in the 18-month period.

On December 20, 2023, we received a notification (the “Plan Letter”),

with NYSE American acceptance of the proposed plan and further deficiency notice.

In the Plan Letter the NYSE American indicated that

in addition to Section 1003(a)(i), the Company was also not in compliance with Section 1003(a)(ii) of the Company Guide, requiring a

listed company to have stockholders’ equity of at least $4.0 million if it has reported losses from continuing operations or net

losses in three of its four most recent fiscal years.

Our common stock will continue

to be listed and traded on the NYSE American during the 18-month period, subject to the Company’s compliance with the other continued

listing standards of the NYSE American and continued periodic review by the NYSE American of the Company’s progress with respect

There can be no assurance that the Company will be able to meet its goals set forth in the Plan.

If we are unable to satisfy

the NYSE American rules and listing standards, or are unable to make progress on our Plan, our securities could be subject to delisting.

If the NYSE American were to

delist our securities from trading, we could face significant consequences, including, but not limited to, the follo wing:

limited availability for market quotations for our securities;

liquidity with respect to our securities;

determination that our common stock is a “penny stock,” which will require brokers

trading in our common stock to adhere to more stringent rules and possibly result in a reduced

level of trading activity in the secondary trading market for our common stock;

amount of news and analyst coverage;

decreased ability to issue additional securities or obtain additional financing in the future.

Our common stock could be further diluted as

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of our stockholders.

Unresolved Staff Comments.

Splash’s physical office is located at 1500

Fort Lauderdale, FL 33316 and 1491 2 nd Street, Sarasota FL 34236 while our business office is located at 1314 East

Las Olas Blvd, Suite 221, Fort Lauderdale, FL 33301.

Copa’s office/manufacturing facility is located at 901 E.

The Dalles, OR 97058.

Legal Proceedings.

We are not currently a party to any pending legal proceedings that we believe

will have a material adverse effect on our business or financial conditions.

We may, however, be subject to various claims and legal actions

arising in the ordinary course of business from time to time.

Mine Safety Disclosures.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors